One of the ‘big six’ energy firms today issued a stark warning about the impact of the collapse of around twenty smaller rivals due to soaring wholesale gas prices.
Keith Anderson, chief executive of Scottish Power, said UK energy customers are set to face at least two or three more price rises to correct the distortions caused by the unprecedented surge in gas prices.
An element of this will be the costs of taking on a large number of customers from suppliers who have gone under, he said.
“We’re looking at a future, it’s sad to say, of two or three price rises coming up because of the state of that market,” explained Anderson.
Anderson told BBC Radio 4 today that energy price caps will almost definitely rise by several hundreds of pounds from April, before adding “that it is not sustainable [and] we need to get to a place where people are paying the true cost of supplying gas and electricity.”
Industry voices are now demanding changes to the price cap, which lags wholesale prices by six months and sets a maximum bill level, following Bulb Energy’s collapse yesterday.
Bulb Energy Ltd was the 23rd energy provider to fail this year and by far the largest with 1.7mln customers.
It will be the first company ever to use the special administration regime (SAR) which is effectively nationalisation by the government and a move expected to cost the taxpayer billions to unwind.
“No other company is keen to step in as a supplier of last resort, which means the taxpayer is likely to take the strain, so we might all end up paying a price,” said Sarah Coles, senior personal finance analyst at Hargreaves Lansdown.
The SAR “has never been used before because a large energy supplier has never been insolvent,” said Ofgem, the energy regulator.
The collapse of Bulb due to sky-rocket high gas prices means over half of Britain’s energy providers have failed this year taking the total number of customers who have had to switch suppliers to almost four million in 2021.
The extortionate price surge of energy has already seen household bills increase substantially, with the upwards trend unlikely to break any time soon.
“Bulb’s collapse could mean as much as GBP150 extra for each household on next year’s energy bills,” predicted Christina McAnea, general secretary at UNISON.
“That’s on top of the GBP150 everyone will already be paying for the numerous other suppliers who’ve gone to the wall since the summer [and] these huge hikes will hit everyone – and low-income families the hardest,” added McAnea.
Lazards, a leading US investment bank, is to be hired to find a buyer for Bulb as it prepares to be plunged into formal insolvency later this week, according to Sky News.
Lazards had already been advising Bulb on potential fundraising options for many months and has held talks with prospective buyers including OVO Energy, Octopus Energy, and Shell.
At least some of these companies are expected to propose offers to buy Bulb out of administration, as the idea that taxpayers funding Bulb’s winter season coupled with the potential normalised gas prices by mid-2022 might make Bulb an extremely attractive takeover opportunity, Sky News said.